Can I form a Pvt Ltd Company to trade FNO

#1

Hi

I am trading FNO since last 2 yrs and doing good. I am only having positional trades in Nifty and BN FNO.

I am managing three accounts to put same orders to trade for my own account, my wife account and my brother in laws account. Some times I miss to take right entry and exits as I need to login all the three accounts one by one to take trades.

I wanted to know, can I form a pvt ltd company and directors will be same me, my wife and my BIL to trade same FNO trades. So that I need to manage only one account of behalf of all of us. Suggest me to handle this and tell me Pros and Cons of the same.

Thanks

Amit

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#2

yes…

but many brokers ( esp margin brokers ) wont entertain LLP or Pvt Ltd for a trading account

#3

Please go through this link to know more about opening a trading account in company name.

https://support.zerodha.com/category/account-opening/company-partnership-and-huf-account-opening

#4

@AmitNifty75 It is a good decision to form a Pvt. Ltd company for doing F&O trades. Mostly if you have Good amount of capital (1cr Above) you will have tax benefits only if you’re earning 20-30% + per Annum.
But keep in mind almost all F&O scripts are under compulsory delivery, Very soon every F&O tradable companies are going under Compulsory delivery option. If you don’t square off your position You have to give or take delivery according yo your open position, no broker is allowing clients to keep open positions after Tuesday if you don’t have margin to take or give delivery of the particular stock which you’re trading in F&O.
As per my knowledge It’s not possible to open demat account as a Pvt. Ltd company because if you hold public listed company shares as a Pvt. Ltd company you need NBFC license because your company will fall under that category.
Do you think it is best to keep all the funds in one account and trade? (Broker default isn’t the problem here, Your emotions would be the big problem here while managing all the funds in one account). If you have experience of getting at-least 20%+ returns for 5 years consistently, You’re good to go.
It’s best if you’re earning 20-30%+ per annum, and be ready to square off your position at least three days before expiry (If you trade in stocks). If you trade in indices It would not be a problem.
Even tax compliance would be high.
Entering orders in different accounts isn’t a big problem here. ( for Ex. If you short any nifty option @ 50, While changing to another account it may be 52). Have a proper setup then order entering would be easy. Try Logitech Bluetooth keyboard which you can change simultaneously with a single long press upto 3 devices, or else try to connect your laptop screen to two monitors via HDMI or USB-C, then it will be very easy to change screens.

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#5

Do you trade through company?
Also will trading through company form provide better credibility and limited liability and what about taxes . I think we have to pay dividend tax before withdrawing profit as a owner so will it have any tax benefit if trading through company.
Thanks

#6

Creating a Companies has its own cost of Compliance’s. You can prefer a partnership than a company.

#7

What is suitable for large size accounts over say 50 lakhs in trading account and portfolio.

#8

If your existing business income is reasonably good then you can do F&O

Investment income should not be greater than 50% of the overall income of the company, else the company needs to be registered as NBFC and will be regulated by RBI.

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